A note on testing for complementarity and substitutability in the case of multiple practices

Recent empirical studies of firm-level performance have tested complementarity in the case of multiple practices. These papers have drawn conclusions using potentially biased estimates of pair-wise interaction effects. We develop a consistent and simple testing framework and test it against alternatives.     

The Economic Impact of Marena’s Investments on Sustainable Agricultural Systems in Honduras

This study examines the economic impact of sustainable agricultural production systems in Central America. In particular, we investigate the impact of investments promoted by the MARENA Programme in Honduras on the total value of agricultural production (TVAP) of its beneficiaries. Propensity Score Matching techniques along with the Difference‐in‐Differences framework are used to mitigate biases stemming from differences in observed as well as unobserved (time‐invariant) characteristics between beneficiaries and a control group. The econometric estimates suggest that MARENA has had a positive and significant effect on the TVAP of beneficiaries. In addition, the analysis shows that, under alternative scenarios, MARENA yielded higher than expected internal rates of return. The results of this study shed light on the response of small‐scale hillside farmers to economic incentives and lend support to the role of natural resource management projects in Central America as a tool to increase household income while also promoting the conservation of natural resources.     

Cross‐Country Determinants of Early‐Stage Necessity and Opportunity‐Motivated Entrepreneurship: Accounting for Model Uncertainty

Model uncertainty is one of the most pervasive challenges in the social sciences. Cross‐country studies in entrepreneurship have largely ignored this issue. In this paper, we evaluate the robustness of 44 possible determinants of early‐stage opportunity‐motivated entrepreneurship (OME) and necessity‐motivated entrepreneurship (NME) that are broadly classified in four groups: (1) economic variables, (2) formal institutions, (3) cultural values, and (4) legal origins and geography. The results, which are based on a representative world sample of up to 73 countries, suggest that institutional variables associated with the principles of economic freedom are most robustly correlated with OME and NME. Our findings also identify net income inequality and Scandinavian legal origins as weakly robust predictors of both types of entrepreneurial activity. Furthermore, we find that log GDP per capita is only a weakly robust predictor of NME, but not OME. We discuss implications for future research.     

Valuing Pharma R&D: The Catch-22 of DCF

There are two principal methods for valuing pharmaceutical R&D projects—discounted cash flow (DCF) and real options valuation (ROV). As typically practiced, DCF valuations tend to be lower than the estimates produced by ROV techniques. Part of the difference, as many have recognized, stems from DCF s limited ability to take account of managers' real option to cut its losses when new information reveals a drug candidate's lack of profit potential. Another reason for the difference, however, is the widespread use in DCF valuations of established success rates that do not distinguish between projects that fail to pass safety or efficacy trials and those that are abandoned for lack of economic viability. If the appropriate success rates are used, the two methods should yield identical project values because they assume the same scenarios. The practical reality, however, is that the two methods deal in a completely different way with the possibility of abandonment for economic reasons. Because ROV accounts for this possibility directly in the model itself, it is much better suited than DCF to this task—indeed, that is the uncertainty that it is designed to deal with. And the fact that 30% of all pharma R&D abandonments are for economic reasons is a strong argument for using ROV rather than DCF to evaluate new drug development.     

Goodness-of-fit tests for Poisson count time series based on the Stein–Chen identity

To test the null hypothesis of a Poisson marginal distribution, test statistics based on the Stein–Chen identity are proposed. For a wide class of Poisson count time series, the asymptotic distribution of different types of Stein–Chen statistics is derived, also if multiple statistics are jointly applied. The performance of the tests is analyzed with simulations, as well as the question which Stein–Chen functions should be used for which alternative. Illustrative data examples are presented, and possible extensions of the novel Stein–Chen approach are discussed as well.     

Patent-based investment funds as innovation intermediaries for SMEs: In-depth analysis of reciprocal interactions,motives and fallacies

SMEs and academic spin-offs play an important role in generating innovations but face resource and competency constraints that have implications for commercializing their technologies. In two in-depth case studies we analyze how patent-based investment funds (PBIFs), operating as innovation intermediaries, help overcome these constraints. In contrast to other patent intermediaries, PBIFs acquire patents and patentable inventions at an early stage of technology development when access to capital is particularly critical. They invest in the technological and legal advancement of their portfolio, which is mostly conducted in close interaction with the technology-providing SMEs and their original inventors. These PBIFs not only provide high added-value in the course of technology commercialization but also operate international networks to facilitate the commercialization of SMEs' technologies at an international scale. Although PBIFs are a promising new agent in the heterogeneous field of innovation intermediaries, their commercialization results and the actual rate of returns are not yet well established.     

The effects of unions and strikes on the rate of growth of total factor productivity in Canada

In this paper, the performance of the New Keynesian IS curve for the G7 countries is assessed. It is found that there is an IS puzzle for both the purely backward-looking as well as for the forward-looking IS curve. The real interest rate does not have a significantly negative effect on the output gap. Based on an extended specification of the IS curve, also including asset prices and monetary aggregates, a significantly negative interest rate effect on aggregate demand is found for all countries. This finding suggests that a richer specification of the IS curve in empirical work may be necessary in order to obtain an unbiased estimate of the effect of monetary policy on aggregate demand.